Justia White Collar Crime Opinion Summaries

Defendant, the former Governor of Virginia, appealed his convictions for eleven counts of corruption. Defendant raised numerous errors on appeal. The court concluded that the district court did not err by denying defendant's motion for severance and his request for ex parte consideration of this motion; the district court did not abuse its discretion by failing to adequately question prospective jurors on the subject of pretrial publicity; the court rejected defendant's claims of evidentiary errors; the district court's jury instructions did not misstate fundamental principles of federal bribery law; and the evidence was sufficient to support his convictions pursuant to the honest-services wire fraud statute and the Hobbs Act. Accordingly, the court affirmed the judgment. View "United States v. McDonnell" on Justia Law

Bell established mutual funds, raised $2.5 billion, and invested in vehicles managed by Petters, who said that he was financing Costco’s electronics inventory. Instead he was running a Ponzi scheme, which collapsed in 2008. Bell and Petters went to prison for fraud. Peterson, the Funds’ trustee in bankruptcy, filed multiple suits. The Funds’ auditors appealed a finding that they committed accounting malpractice because they did not perform spot checks that would have revealed the Petters scheme. On remand, the auditors contended that Bell had committed fraud because documents sent to potential investors represented that the money lent to Petters entities was secured by Costco’s inventory and that repayment was ensured by a “lockbox” arrangement under which Costco would make payments into accounts that the Funds (not Petters) would control. Bell admitted that he knew from the outset that this was not true. The district court concluded that the Funds’ misconduct was at least equal to the auditors, if not greater, and dismissed the auditors, without considering whether they failed to perform their duties. The Seventh Circuit affirmed, rejecting an argument that the pari delicto doctrine in Illinois applies only when plaintiff and defendant commit the same misconduct and stating that it is time to focus on the investors’ claims. View "Peterson v. Lesser" on Justia Law

Lemons applied for social security disability benefits after being diagnosed with a pain disorder caused by inflammation of a membrane that surrounds the nerves of the spinal cord. An ALJ awarded benefits and Lemons began receiving $802 per month. The ALJ, advised that Lemons’s condition was expected to improve, recommended follow-up review. The Administration failed to conduct the review and never contacted Lemons until it received an anonymous letter, including photographs of Lemons engaged in various activities. Investigators conducted surveillance. The Administration initiated review. Lemons responded that she could not pick up anything over 20 pounds nor sit more than 30 minutes without causing increased pain. The Administration discontinued benefits. Lemons appealed and chose to continue benefits during the process. Investigators met with Lemons’s treating physician, and showed her surveillance videos; the doctor revised her assessment and concluded that Lemons could perform some work. A cessation of benefits decision recorded a finding of “Fraud or Similar Fault.” Lemons was convicted of making a false statement, 18 U.S.C. 1001, and theft of government funds, 18 U.S.C. 641. The district court calculated a guidelines range of 27-33 months’ imprisonment, based on an intended loss totaling $284,018.64, varied downward, and sentenced Lemons to 12 months and one day. The Eighth Circuit affirmed. View "United States v. Lemons" on Justia Law

From 2007-2010, Harris and co-conspirators added themselves as authorized users on existing credit card accounts without the account holders’ knowledge or permission, then took cash advances, cashed convenience checks, and made fraudulent purchases with the accounts. The scheme involved over 50 victims, and resulted in $300,000 in pecuniary loss. In 2008, Harris was taken into custody when a bank became suspicious and called police. Police took, from plain view in Harris’s truck, a notebook, containing a litany of personal information about 14 people. A fingerprint examination revealed 48/50 prints pulled from the notebook matched Harris’ prints. Harris was released, but did not claim the notebook. In 2013, Harris was convicted of fraud and conspiracy to commit fraud with identification documents, 18 U.S.C. 1028(a)(7), 1028(f), 1029(b)(2), and 1349; production and trafficking in counterfeit devices (credit card fraud), of 18 U.S.C. 1029(a)(2); and aggravated identity theft, 18 U.S.C. 1028A. The district court sentenced Harris to 156 months’ imprisonment and ordered him to pay $299,298.67 in restitution. The Seventh Circuit affirmed, rejecting arguments that the court erroneously denied his motion to suppress the notebook and of insufficient evidence to support his conviction, and a challenge to the sentence. View "United States v. Harris" on Justia Law

Fry solicited funds from investors for promissory notes issued by Petters, stating that the notes would finance purchases of merchandise that would be resold at a profit. In fact, the notes were part of a Ponzi scheme orchestrated by Petters, who was convicted separately. The transactions were fictitious, documentation was fabricated, and early investors were paid purported profits with money raised from the sale of notes to later investors. From 1999-2008, Fry and his recruits raised more than $500 million. Fry continued to misrepresent the investments and to solicit investments after the scheme began to unravel, causing $130 million in losses for 44 victims, while he collected tens of millions of dollars in fees. Fry made false statements to the SEC during its investigation. He was convicted of securities fraud, 15 U.S.C. 77q(a), 77x ,18 U.S.C. 2; wire fraud, 18 U.S.C. 1343; and making false statements to the SEC, 18 U.S.C. 1001(a)(2). The district court sentenced Fry to 210 months’ imprisonment. Other participants in the Petters scheme pleaded guilty to various charges and were sentenced by the same judge. The Eighth Circuit affirmed Fry’s conviction and sentence, rejecting an argument that it should presume that the court sentenced him vindictively, in retaliation for his exercise of the right to a jury trial, because Fry’s sentence was longer than sentences imposed on defendants who pleaded guilty. View "United States v. Fry" on Justia Law

After a jury trial, Defendants - a licensed chiropractor and a licensed physician - were found guilty of, among other counts, enterprise corruption, scheme to defraud in the first degree, grand larceny in the first degree, and money laundering in the first degree. Defendants challenged their enterprise corruption convictions on the ground that the continuity of existence element was not demonstrated. The Appellate Division affirmed. The Court of Appeals affirmed, holding (1) the People proved the existence of a criminal enterprise as a matter of law because the prosecution in an enterprise corruption case may prove that a defendant was a member of a criminal enterprise, with a continuity beyond the scope of individual criminal incidents, without showing that the enterprise would have survived the removal of a key participant; (2) Defendants’ challenges to the trial court’s instructions on accomplice liability were not preserved; and (3) Defendants received effective assistance of counsel. View "People v. Keschner" on Justia Law

Hansen, a farmer, served as a bank trust officer. In 2003, he invested, through Johnson (a stock broker), in the Hudson Fund, a hedge fund Johnson ran with Onsa and Puma. Hansen continued investing with the three. In 2007 Hansen and Johnson formed RAHFCO limited partnership. Hansen served as general partner, but delegated responsibility for executing trades to the Hudson Fund. Hansen misrepresented RAHFCO to investors, directly and through a private placement memo. Hansen prepared and sent investors earnings statements that falsely inflated RAHFCO’s performance. Hansen later testified that he relied on Onsa and Johnson to provide the numbers and never confirmed them. Hansen hired an accounting firm for an audit, but the firm quit after Hansen refused to authorize it to obtain a brokerage statement confirming RAHFCO’s investments. RAHFCO’s law firm withdrew. Johnson was charged in 2007 with securities fraud concerning another company. Onsa was sued civilly for fraudulent securities trading in 2009. Hansen never informed investors of any of these events nor did he attempt to find another auditor. In 2011, RAHFCO collapsed. Convicted of mail fraud, wire fraud, and conspiracy to commit mail fraud and wire fraud, 18 U.S.C. 1341, 1343, 1349, Hansen was sentenced to 108 months imprisonment and ordered to pay $17 million restitution to 75 victims. The Eighth Circuit affirmed, upholding the use of a willful blindness instruction and an instruction on conspiracy. View "United States v. Hansen" on Justia Law

Kielar, a pharmacist, got many patients from Dr. Barros, whose office was in the same building, and began defrauding two insurance companies. Kielar forged prescriptions for Procrit under Barros’s name and submitted them for payment, knowing that Procrit had neither been prescribed, nor provided, to the individuals under whose policies he sought reimbursement. The insurers lost $1,678,549. Kielar was indicted for health care fraud, 18 U.S.C. 1347, with a forfeiture allegation, 18 U.S.C. 982(a)(7) that identified properties subject to forfeiture, including a Florida property. Kielar asserted that he needed the proceeds of its sale to pay legal fees. The court granted a motion to release lis pendens and ordered that the proceeds of the sale be placed in escrow with the U.S. Marshals Service. Kielar unsuccessfully requested that the court allow him to use the sale proceeds “for taxes, legal fees and other expenses.” He was convicted of six counts of health care fraud; three counts of aggravated identify theft, 18 U.S.C. 1028A(a)(1); and of using false records to impede a federal investigation, 18 U.S.C. 1519. The Seventh Circuit affirmed, rejecting arguments that the court erred in failing to hold a hearing on his request to release his escrowed funds, by limiting cross-examination of Barros, and by preventing Kielar from calling a former patient as a defense witness. View "United States v. Kielar" on Justia Law

Katherine Fleming was indicted on two counts of identity fraud and two counts of financial transaction fraud. She entered a negotiated guilty plea, which allowed for deferred sentencing and participation in a drug court program. Her plea agreement specified that she would be sentenced to eight years of probation if she completed the drug court program, but she would be sentenced to ten years, with the first four to be served in prison and the remaining six to be served on probation, including residential substance abuse treatment, if she failed to complete the program. The agreement also provided that she would make restitution payments under either scenario. After more than two years in the program, Fleming was terminated from the drug court program for failure to comply with its rules. Consistent with the plea agreement, the trial court then imposed a ten-year sentence, the first four to be served in prison and the remaining six to be served on probation, including residential substance abuse treatment. The Supreme Court granted certiorari to determine under what circumstances a defendant may receive sentence credit for participation in a drug court program established under OCGA 15-1-15. After that review, the Court held that no sentence credit for participation in a drug court program was warranted in this particular case. View "Fleming v. Georgia" on Justia Law

Rodd, an investment advisor who produced and was regularly featured on a Minnesota local radio show, “Safe Money Radio,” was convicted of wire fraud, 18 U.S.C. 1343 and mail fraud, 18 U.S.C. 1341, for swindling 23 investors out of $1.8 million. Rodd used the radio show to market low-risk investment products to gain customers’ trust and maintain a client base for soliciting participants in a fraudulent investment scheme. Rodd solicited money by promising liquidity, safety, and a 60% six-month return. Rodd instead used the money for personal and business expenses, hiding behind false assurances of security and payouts to his early investors. Finding an advisory guidelines range of 70 to 87 months, the district court sentenced Rodd to 87 months in prison, applying a two-level enhancement for abusing a position of trust, U.S.S.G. 3B1.3, The Eighth Circuit affirmed, upholding the finding that Rodd occupied a position of trust. As a self-employed investment advisor, Rodd was subject to no oversight except by his investors. The discretion and control he possessed over client funds adequately supported the finding. The court did not err in failing to apply a two-level acceptance-of-responsibility reduction. Rodd took his case to trial and denied his guilt to the end. View "United States v. Rodd" on Justia Law